Page 13 - CIMA OCS August 2018 Day 1 Tasks

MANSAKO FAMILIARISATION

Future challenges

Thomas Fine Teas faces a number of key challenges.
Firstly it needs to invest in new product development for green teas and infusions. The company
is currently over-reliant on black teas, a market segment with little or no growth prospects
Secondly, it needs to reconsider its marketing approach and how best to target younger people
and those seeking a healthier lifestyle.
Thirdly it needs to consider how best to manage large powerful customers, such as supermarket
chains. At the moment Thomas Fine Teas seems to have the edge when it comes to pricing but
the fact that receivables days is over 100 days would indicate that the company is not having
everything its own way.

3 KEY TOPICS

The key topics that this case would suggest are as follows:
E1

Marketing – brand management
The company’s brand is critical to its marketing strategy and overall business model. Given this,
tasks relating to managing the brand are likely to come up. Make sure you can discuss how to
strengthen and position the brand effectively and consider how you would respond if events
arose that could threaten the brand, such as quality problems (e.g. the use of pesticides affecting
flavour) or ethical issues with suppliers. With such tasks it is vital that you relate your comments
to the specific circumstances of Thomas Fine Teas.

Marketing – pricing
Currently Thomas Fine Teas can set higher than average prices due to brand strength and
perceived quality. However, market pressures are such that supermarkets only make small
margins. Thomas Fine Teas may thus find itself under increasing pressure to reduce prices and/or
offer more promotional discounts. Make sure you can discuss the factors that influence pricing
and how best to manage large customers.
Marketing – distribution

Other than selling direct to four large corporate customers, the company’s channel strategy is to
sell via supermarkets and wholesalers. You could consider whether Thomas Fine Teas could sell
directly to consumers, say via a website, or choose to miss out wholesalers and sell direct to
smaller independent shops and retailers.
Marketing – promotion

As mentioned above, Thomas Fine Teas currently uses traditional advertising channels such as
media and TV advertising. While these have the potential to reach large amounts of the
population, alternatives may be needed to specifically target younger consumers to increase
demand for green teas and infusions. Make sure you revise alternative approaches and can apply
them to Thomas Fine Teas
Sourcing strategy
Thomas Fine Teas buys tea leaves through an auction process, giving uncertainty over purchasing
volumes and prices paid. Many competitors are switching to direct supply arrangements, so
ensure that you can discuss the pros and cons of Thomas Fine Teas switching to a similar
agreement with growers.

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